The Securities and Exchange Commission has issued a warning to Cebuanos over the XNC cryptocurrency fraud
On Monday, the Securities and Exchange Commission’s Cebu extension office issued a warning to Cebuanos about digital currency scams run by persons who prey on naive would-be investors.
SEC-Cebu legal officer Giness Marie Teves noted that although digital currency Xian Coin or XNC is not licensed to provide investment schemes to the general public, it is highly active online in soliciting would-be investors.
“While cryptocurrency is not illegal since the Bangko Sentral ng Pilipinas (BSP) has regulated the cryptocurrency exchanges, what makes XNC dubious is that it has no SEC registration and it does not have the required license from SEC to solicit investments. Please take note that any corporation who wishes to engage in investment-taking should have a secondary license in order to operate,” Teves said in a statement.
The SEC Enforcement and Investor Protection Department (EPD) classified XNC as a “Ponzi scheme” in a June 7 advisory.
According to the SEC-Cebu statement, a Ponzi scheme is a deceptive approach in which money from new investors is utilized to pay “fake profits” to earlier investors, and is primarily meant to benefit top recruiters and previous risk-takers.
According to the report, the scam causes victims to assume that revenues are coming from genuine enterprises when they are really coming from other investors.
According to the SEC’s Cebu extension office, the EPD investigation revealed that Xian Coin persuades would-be investors that by using a single and centralized supply chain, they can benefit from a wide range of price stability and value appreciation.
The XNC scheme is independently administered by the virtual cryptocurrency bank of Xian Gaza, according to the release, and has a restricted world quantity of 75 million XNCs.
Based on Circular No. 1108 released this year and the VASP rules, the EPD determined that XNC is not a registered virtual asset service provider (VASP) with the BSP.
Xian Coin is a centralized digital currency backed by the Ethereum Blockchain that is only traded by its coin holders and held by a virtual cryptocurrency bank where coins may be exchanged for other currencies, according to the SEC in Cebu.
For XNC transactions, the company utilized online payment methods such as GCash and bank transfer, as well as its own Facebook group.